Finally, a Minimum Wage?

by singaporearmchaircritic

Last week, these headlines were splashed across our mainstream media: “10,000 cleaners set to get pay increases” (Today); “Across the board pay increase for cleaners” (清洁工起薪全面提高, Lianhe Zaobao); “Proposed cleaners’ pay starts from $1,000” (Straits Times). Some even likened it to “a minimum wage in deed and not in name” which would then signify an about-turn for our government who, as recent as last year, was adamant that “a minimum-wage policy runs counter to the Singapore work ethic and culture of self-reliance” (source).

The plight of our poorly-paid cleaners (“My wife’s life as a cleaner”) has struck a chord in many Singaporeans and last week’s news must have brought some cheer to those of us who believe a pay raise for workers in the cleaning industry is long overdue.

But is it really as good as a statutory minimum wage? And are there any loopholes that may be exploited by unethical employers? Since these are only recommendations, what are the incentives for employers to implement the guidelines? Are there any penalties for errant accredited cleaning companies that have won tenders for government jobs? What measures are in place to prevent the exploitation of disadvantaged workers?

Progressive Wage Concept

Let’s take a closer look at some features of this new scheme called “progressive wages,” which was actually mooted in June this year (“NTUC to raise wages for cleaners,” ST):

Who:

• Sector and job specific: cleaners and other workers like truck drivers and machine operators in the cleaning industry
• Apply to full-time cleaners who are Singaporeans and PRs only (p.4)
• Part-time workers’ pay will be pro-rated based on the number of hours worked (p.4)

What:

• Wage rates are recommendations and not regulations
• Aims to help 10,000 cleaners in three sub-sectors – office and commercial buildings, food and beverage establishments, and conservancies – to earn a monthly wage of at least $1,000

How:

• Monthly wage approach
• Government to take the lead with the 7,000 workers (10% of total number of cleaners) taking up cleaning jobs in government departments
• Clean Mark Accreditation Scheme: launched July 2010, there are 61 accredited cleaning companies hiring 24,000 cleaners; with the new criteria, i.e. a minimum pay of $1,000 coming into force next month, companies have to meet the new standards and be re-accredited in order to tender for government jobs from next April; only accredited companies will be awarded government contracts

When:

• Most outsourced cleaning contracts are valid for 2-3 years and the government hopes employers will adopt the recommendations upon the renewal of contract in the next two years
• NTUC targets to help 10,000 workers earn a wage of $1,000 by 2015

As Always, the Devil is in the Details

(1) Higher pay for longer hours?

The biggest flaw of this new scheme is that it adopts a monthly instead of an hourly wage approach. This opens a Pandora’s Box of problems.

According to Zaobao, the monthly wages and pay increases of cleaners are as follows:

Everything looks good on paper. However, if you recall the disputes over SMRT’s supposed pay increment for its bus drivers, simply saying that the monthly gross salary will be increased is totally meaningless without revealing how the pay package is structured.

Employers can easily manipulate the number of working hours, the number of days in the work week/the number of rest days, the sum of the basic pay (excluding allowances and reimbursements), the overtime pay and so on, to give the illusion of an overall increase in gross monthly pay when in reality the work conditions are harsher and the hourly wage rates are reduced.

In contrast, the Hong Kong Statutory Minimum Wage (SMW) favored an hourly wage approach in recognition that it helps “forestall exploitation of employees by ensuring that their pay would be commensurate with the duration of work, with wages no lower than the SMW level” (source). Even so, there are devious employers that withheld payment for meal time and/or rest days.

Furthermore, it is unclear whether the recommended wage rate of at least $1,000 refers to the “basic pay” or the entire “pay package.” News reports seem to indicate the former whereas the official document is more ambiguous. The section “Advisory on Allowances and Reimbursements” (p.5-6) states that:

The TCC advises employers to structure the salary package such that employees can enjoy a predictable and fair basic pay. This is because under the Employment Act, the basic rate of pay (which excludes allowances) is used to compute the salary payment for overtime work, and work on rest days and public holidays. Hence, when the basic pay is low, the overall take-home pay (which includes payment for overtime etc) will be correspondingly lower.

To illustrate this, recall the brouhaha over Sakae Sushi’s $3,000 job offer to recruit dishwashers. A 12-hour work day/6-day week, or a 9-hour work day/6-day week makes a hell of a difference. In the case of the former, the dishwasher has to clock in a 72-hour work week, i.e. the maximum 44 hours (excluding breaks and overtime) under the Employment Act and 28 hours of overtime work to bring home $3,000 per month, which doesn’t sound so attractive anymore.

(2) Enforcement

Before Hong Kong implemented a SMW in May 2011, it had a similar scheme called the “Wage Protection Movement” whose success depended entirely on employers’ voluntary participation. Under the scheme, enterprises that hire cleaners and security guards have to “pledge” to pay these workers at market rate. Considering the way it was designed, it would be a miracle if the scheme turned out to be less than the utter failure that it was.

So how will our government ensure that its own recommendations are followed? As mentioned earlier, our government intends to take the lead by increasing the pay of 7,000 workers taking up cleaning jobs in government departments.

A union spokesperson told Zaobao that the government shall award contracts only to accredited cleaning companies, and this will pressure private enterprises to offer more competitive wages or they may find it difficult to hire cleaners to work for them.

This begs the question: given that only 10% of the total number of cleaners are directly or indirectly hired by government departments, how and why should the rest of the cleaning companies that hire 90% of the cleaners be pressured to follow suit and grant their cleaners the recommended pay raise?

(3) The disadvantaged workers

According to the news reports, the cleaning industry hires more than 70,000 cleaners, among whom 46,000 (65%) are “locals” (Singaporeans and PRs?). Most of these cleaners are paid less than $1,000 and some earn less than $700 (source). The pay scale is between $675 and $950.

Of the locals, how many are elderly workers – the old aunties and uncles so commonly seen in cleaning jobs in our food courts, shopping malls and HDB estates? It may be presumed that these elderly workers are hired at a salary that is lower than the market rate. Will the new recommendations apply to them too? And how does the government ensure that these cleaners do not lose their jobs to younger, more able-bodied workers under the new guidelines?

Given that we hardly have a social safety net here in Singapore, it is paramount that the jobs of these disadvantaged workers are protected under the new scheme. These elderly workers have taken up the physically-demanding cleaning jobs because they need the pay, measly as it is.

If there isn’t already, some scheme should be installed to protect our elderly and other disadvantaged workers. For instance, the government can subsidize cleaning companies that hire disadvantaged workers by defraying part of their salary.

Dear readers, if our government’s move to increase pay for cleaners is a reaction to our society’s growingly vocal criticisms and concerns over the yawning rich-poor gap, then it is our responsibility to monitor the developments and make sure the government delivers what it promised.

Let’s keep our eyes wide open and see if the half-hearted measures will work. Should the progressive wage scheme proves to be a failure in the coming months, the next step for the government should be to legislate a minimum wage as Professor Lim Chong Yah suggested.